Better use of management information by the top brass at Whitehall would improve public spending decisions and bring greater benefits for taxpayers, says a new report from the Institute for Government.

Launched today, the report calls for more sustained focus on value for money, not just on policy development, from Whitehall permanent secretaries and finance directors.

The report, produced in collaboration with the Chartered Institute of Management Accountants (CIMA) and Deloitte, says that the lack of a business tool is striking and must become a priority across the service. "Unlike businesses that use management information systematically to drive decision-making, Whitehall uses it sporadically. There is still too much of a focus on new policy initiatives rather than driving value for money through the £700bn government spend," the report says.

Charles Tilley, chief executive of the CIMA, said: "Put bluntly, many government decisions appear to based upon a hunch and not evidence with a clear focus on shaping policy around what can be delivered, and at what cost. We need quality management information which can be translated into practical tools to enable effective decision making."

He added: "All of this needs to be couched in a framework of an overall government strategy. The government must build upon its pockets of best practice so that a culture of quality information and analysis becomes the norm right across Whitehall."

But adopting a clear strategy was just one issue highlighted in the Improving Decision Making in Whitehall report; another was making sure that the right information was available.

Mike Turley, public sector industry leader at Deloitte, said there needed to be a culture change in the way information is seen and collected across the public sector. "Improving the use of management information and data will be crucial to reforming services and bringing down costs across the public sector in a sustainable way," he said.

"There is a large volume of data held across central and local government and better understanding of it can drive improvements in efficiency and evidence-based decision-making. However, a cultural change is needed across the public sector to improve the collection and analysis of information."

The report highlights six case studies, which the IfG says shows that Whitehall has the capability, if not the will, to use more complex information in decisions made at the top.

Cabinet Office minister Francis Maude said the government also needed more accurate management information to keep a check on value for money and risk.

"Following the financial crisis, the government faces increasingly stark choices on how to manage its resources functions, services and operations more effectively," he said. "To make informed decisions, keep a check on value for money and assess risks, the government needs accurate management information."

The report suggests that financial directors should be given responsibility for developing management information and recommends that priority be placed on "continuously improving value for money".

"Permanent secretaries in Whitehall would need to be more transparently responsible for the way their departments use management information to drive their business," it says.